EMPLOYER HSA CONTRIBUTIONS

[Lee B]

Taxpayer signed up for HDHP and his employer made about $ 3,700 in contributions to his HSA. He made no contributions.

Unfortunately, his spouse, a schoolteacher continued to cover him for all of 2021 with her standard non HSA plan.

In this case I assume the contributions made by his employer become taxable?

 

TIA

 

[jklcpa]

Yes, he's ineligible because of her coverage if her plan covers the same things as his.  If you need a reference, it is irc sec 223(c)(1)(A).

If the excess was discovered last year, it should have been included back in taxable wages.  His options now are to leave it in, include it in income and pay the 6% excise tax, and he could apply it in 2022 as a contribution assuming he is eligible this year.  OR, he can withdraw the excess + earnings before the due date and it would be as if the contribution wasn't made.  I believe there is also a rev proc that allows one to make the correction after the due date also. I remember seeing that in the instructions for form 8889 when I was looking at that the other day. There is a whole section on excess contribs by the employer.